Definition of Domestic Debt

A country occasionally needs to borrow from institutional and individual investors for budgetary purposes. Top officials, such as central bankers, may also engage in debt transactions on securities exchanges to implement monetary policies.

Debt is a liability you must repay. It may also be a financial guarantee or commitment that you must honor on time. A short-term debt is a loan you must repay within 12 months. A long-term liability has a maturity date exceeding one year. Examples include loans, taxes and bills.

Domestic debt, otherwise known as national debt, consists of liabilities that a country's citizens and government owe. For example, the United States domestic debt includes Treasury notes, bonds and bills. The U.S. debt also includes credit card debts, student loans, mortgages and business loans that individuals and corporations owe.

Domestic debt is distinct from sovereign debt. Sovereign debt products are bonds that a national government issues within a given country.